Election Primer Part 1
This is the first in a series of posts about economic performance and policy under the past two presidents, who happen to be the candidates in the upcoming election.
A few things to note:
Your biggest takeaway from most of these charts should be that the pandemic had a bigger affect on the economy than any policy or president.
We will aspire to a Switzerland-like level of neutrality in these posts. Insulting people’s favorite party or presidential candidate is bad for business.
That said, sometimes we will attribute an economic outcome to policy, or show that the economy performed worse along some dimension during your preferred candidate’s term. Please don’t be mad at us.
Our goal here is that you know enough to ignore the sometimes true but always misleading claims both candidates (and their surrogates) will make about the economy over the next six months. We’ll include examples of such claims in each post.
Employment
This graph shows total employment. Aside from the pandemic, it’s not particularly interesting.
This is the same graph but with a shortened y-axis.1
Through the first three years of their presidencies, Obama had 5.8% job growth, Trump had 4.2%, and Biden had 10.1%.
The fast growth for Biden was only possible because the economy was already regaining jobs—lost during the early months of the pandemic—at a blistering pace at the start of his administration. That said, job growth during 2023 and 2024 has exceeded even the most optimistic expectations.
Trump inherited an economy that was in a long but slogging recovery from the Great Recession. The somewhat slower growth during the third year of his administration had a lot to do with emerging worker shortages.
Unemployment Rate
The unemployment rate fell during the second Obama term and—until the pandemic—kept falling under the Trump administration. At the start of the pandemic, unemployment had just hit 3.5%. At the time, that was the lowest rate since the 1960s.
By the end of Biden’s first year in office, the unemployment rate was back below 4.0%. In January 2023, it established a new 50+ year low at 3.4%. It’s since risen back to 3.9%, which is still a really low unemployment rate by historical standards.
Misleading & Outright Wrong Claims
The Biden admin claims that “As a result of President Biden’s economic plan, 2021 and 2022 were the two strongest years of job growth in history.” This isn’t factually incorrect, but the economy was already regaining jobs at a rapid pace when he took office. This is like if Usain Bolt sprained his ankle, and the doctor that cut his cast off put on his website, “I shaved 15 seconds off the fastest man in the world’s 100-meter time.”
The Trump campaign website claims that “Joe Biden is the destroyer of America’s jobs.” I guess this could be technically true, if they’re saying that Biden’s policies destroyed some specific jobs despite net growth in overall employment. Still, the U.S. economy has added 15.4 million jobs through the first 40 months of the Biden admin, so “destroyer of America’s jobs” is at the very least deeply misleading.
Final Thoughts
Regarding job growth: presidents get too much credit and too much blame for it.
Regarding unemployment: both guys have a lot to brag about. Sure, the unemployment rate was already falling when both of them took office, but at least they didn’t screw it up.
More broadly, labor shortages are probably a bigger concern than joblessness when the unemployment rate is below 4%. That makes for a nice transition into the topic of our next Election Primer post…
What’s Next
Our next post in this series will take a deeper dive into unemployment and labor shortages. The the one after that will look at wages. Other topics we plan to get to include inflation, population growth, the federal deficit, and construction spending, among others.
There’s also Week in Review, our every Friday post where we concisely cover everything you need to know about the economy. This week is bizarrely light on economic data releases, so we’re going to include some less common indicators like:
The Men’s Underwear Index
The Economic Policy Uncertainty Index
The Crane Index
Are these useful? Ehhh. But they are interesting.
Week in Review is just for paying subscribers. If that’s not you and you want it to be, just click the button below:
Some people say you should always start the Y-axis at 0. Those people are wrong.